Forex trading in Nigeria has become easier to get involved in during the past decade, which have also mostly seen strong economic growth and rising disposable incomes for many Nigerians despite post-2014 economic problems.
Nigerian Forex traders can learn here how to get started trading Forex, the correct approach to learning how to trade and deciding upon a profitable trading strategy for use, and which Forex brokers are most suitable.
How to Get Started Trading Forex in Nigeria
The essential requirements to get started are the same as in any other country. Traders need to have a computer or mobile device, a stable internet connection, trading capital (more on how much you will need later), and an account with a trusted Forex broker. Reliability of internet connections and electricity supplies have become considerably more reliable in recent years, especially in urban areas, which makes Forex trading easier. However, these factors mean traders in Nigeria should be careful to never execute a trade without inputting a hard stop loss, to prevent catastrophic losses in the event of a lost connection which cannot be re-established quickly.
Later sections in this article will discuss the practicalities of getting set up as a Forex trader. At this point, I emphasize that there is no point in trading Forex until you have a profitable trading strategy which you are psychologically ready to execute. You will not succeed in Forex with positive psychology alone, but a lack of psychological preparation can ruin the ability to successfully execute even a winning, profitable trading strategy. The lack of a sound trading strategy reduces Forex trading to gambling, with the odds stacked against the trader, and the eventual loss of the entire trading account.
The most proven trading strategy which has been proven to succeed over the years is a strategy which trades only in the direction of a strong trend, cuts losing trades short, and lets winners run. However, even with such a good strategy, there will be losing trades and losing periods, which the trader must be psychologically ready to accept as inevitable. By using good risk management, a Forex trader can ensure survival through the losing periods and coming up ready to profit when the market turns profitable again.
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It is important not to assume that Forex trading is easy money. It requires mental work and dedication.
Step by Step Guide to Getting Started for Beginners in Nigeria H3
1. Get educated about Forex
The first step to becoming a forex trader in Nigeria is to learn about forex trading itself. It is specialized knowledge, and you need to understand certain aspects, such as what drives currency price movements and more. There are numerous online courses available for beginners that you can pick up and learn the ins and outs of forex trading.
2. Choose a Forex broker
After learning about forex, you can proceed to choose a broker of your choice and open an account with them. However, ensure you conduct adequate research on the platforms before you deposit real funds with any broker.
3. Decide on your trading strategies
While anyone is inevitably going to be wrong in predicting market movements much of the time, having a trading strategy goes a long way in helping you set guidelines for your trading activities. All trading strategies are based upon trend, mean reversion, or some combination of the two. You need to consider your risk tolerance and available cash for Forex trading: you should only trade Forex with money that you can afford to lose.
4. Monitor your positions and performance
It is important that you keep on top of your activities, as markets can fluctuate quickly.
5. Keep your emotions under control
One of the biggest mistakes beginners make is letting their emotions take control over their brains. Obsessing over unanswered questions in the market can cause confusion and lead to panic or revenge trading. Hence, it is important that you don’t get carried away emotionally, so train yourself to take either profits or losses with a pinch of salt, although if you think you are doing something very wrong which leads to extreme losses you should take fast steps to check that. As a trader, you need to be disciplined enough to close out your positions when necessary.
Nigeria's Financial Situation
Nigeria is home to over 186 million inhabitants, making it the most populous country in Africa and the seventh most populous in the world. The population is anticipated to exceed 250 million by 2050, while the country is already home to the third-largest youth population as well as the twentieth largest economy in the world.
A good measure of Nigeria’s increasing prosperity is the fact the gross domestic product per capita (per person) increased from $352 in 2001 to $3,222 in 2014 – an increase of approximately 900%! However, the figure has fallen sharply since 2014 to stand just below $2,100 by 2020.
Despite Nigeria’s position as a relatively prosperous African country, most Nigerians would agree that getting by is neither easy nor simple. When you combine these challenges with the fact that it is not impossible to get some spare cash together, you can see why Forex trading continues to become more and more popular in Nigeria. However, very few international Forex / CFD brokerages maintain a presence in Nigeria, so Nigerian Forex traders need more impartial guidance, which can be found in this article.
Is Forex Trading Legal in Nigeria?
Forex trading is legal in Nigeria if you trade your money for your personal benefit alone. This mirrors retail trading regulations in most countries. Raising capital from third parties for their benefit without a proper license to do so is illegal and, tempting as it may be, can get you into trouble if the third parties become dissatisfied and complain. Forex trading where you are managing other people’ money is extremely challenging psychologically. For these reasons, please trade only with your own money where losses are not catastrophic to your ability to pay your essential costs of living.
How Much Do I Need to Start Trading Forex in Nigeria?
There are some Forex and CFD brokerages which require no minimum deposit and accept Nigerian residents as customers, so in theory at least, you can trade Forex in Nigeria with as little as $1. The problem is that due to issues of leverage and currency exchange with most Forex brokers not accepting deposits directly in Nigerian Naira, it is impractical to trade Forex with much less than $100 or its equivalent. Even $100 can be problematic due to trade size and leverage issues, so it is certainly true that something close to $500 will work better.
One Forex broker with expertise in serving Nigerian resident clients is FXTM, which, unusually for a major international Forex brokerage, has a physical presence in Nigeria. FXTM requires a minimum deposit from Nigerian residents of only ₦10,000.
Where Can I Learn to Trade Forex in Nigeria?
There are several institutions in Nigeria which claim to be able to train aspiring Forex traders for trading success and profit, in return for a fee covering the provision of this apparent education.
If you are looking for a place Although a few of these institutions may be sincere in their intentions, and the attempts of aspiring traders to invest in a proper trading education laudable, the fact remains that paying for Forex training in Nigeria is not recommended. Simply put, you can find everything you need to know to become a successful and profitable Forex trader for free on the internet.
Aspiring Nigerian Forex traders will see a better return from time spent reading through this site and searching through google for good material than they will see from investing in Nigerian Forex educators.
When you do find material on Forex trading strategies, ask yourself whether any supporting historical data is shown to support the claims made. If not, it is probably because whoever wrote the material has no idea whether the strategies have worked well or not, so beware.
Forex Brokers in Nigeria
Below is a brief overview of Forex brokers in Nigeria. You can read a more detailed listing here.
The Nigerian Forex market went through a boom-and-bust cycle between 2004 and 2010, and a wave of Ponzi schemes swept the country during this period. This atmosphere prevented interest in Forex trading in Nigeria from taking off, but the picture has improved considerably since 2010 as a calmer financial environment and generally increasing prosperity began to prevail.
FXTM is the sole international Forex / CFD broker with a physical location in the country. Adding to its appeal is the Naira trading account, which makes it very simple for traders to manage their portfolios as no currency conversion are required to execute deposits and withdrawals to and from an FXTM trading account. The acceptance of bank wires from Nigerian banks is a further improvement to the services offered by FXTM to Nigerian resident traders.
While there are a few local Nigerian Forex brokers currently operating, if I were a Nigerian resident Forex trader, I would strongly prefer to open an account with an international brokerage instead of a local solution.
Other international Forex / CFD brokerages which service Nigerian residents include AvaTrade, Pepperstone, and IC Markets. Unfortunately, none of these brokers offer Naira accounts. Nigerian Forex traders will have to ensure that the brokers provide a payment processor catering to Nigeria, as currency conversions may pose a challenge.
Happily, the Forex market in Nigeria continues to strengthen and become a more attractive venue for international business, with the Central Bank of Nigeria (CBA) and the Securities and Exchange Commission (SEC) developing a stronger regulatory framework in recent years. More international Forex brokers are anticipated to follow FXTM into Nigeria, widening the choice for Nigerian Forex traders.
The MetaTrader 4 platform is available at every broker mentioned, while the MetaTrader 5 and cTrader platforms are also available at some of them.
Best Time to Trade Forex in Nigeria
One advantage that can be enjoyed for free by everyone trading Forex in Nigeria is the time zone. Nigeria is one hour ahead of London, the global center of Forex markets.
The best time to trade Forex is the time during which there is the most volume and liquidity in the market. Studies have shown that the highest volume and liquidity in the Forex market occurs during the overlap between the London and New York sessions, with both remaining relatively high until New York closes for business at the end of its day. Happily, this means that the best time to trade Forex is between 2pm and 10pm Nigerian time. This is convenient for most Nigerian Forex traders, as it means it will be easy for most to be awake during this period, and most of this time is after normal working hours, meaning that Nigerians do not have to give up their normal day jobs to day trade Forex successfully during peak market hours.
Advantages & Risks of Forex Trading in Nigeria
· Accessibility: allows traders in Nigeria to access global financial markets.
· Leverage: Forex traders have access to leverage via margin trading, allowing them to increase their potential profits.
· Potential for Fast Returns: Forex trading can offer fast returns for traders due to the market’s deep liquidity.
· Easier to Short Sell: short selling with forex is easier compared to the stock and commodities markets.
· Liquidity: The forex market is the largest market globally in terms of the trading volume. This means that there is almost always liquidity available for trading, especially for the major currencies.
· Low Fees and Commissions
· Availability of Automated Trading
· Leverage: while leverage amplifies the profit of winning trades, it also amplifies losses, so it can be a double-edged sword.
· Not Available 24/7: Unlike the cryptocurrency market, forex trading is only accessible at a good price on weekdays.
Forex trading should be seen as an opportunity for a “side hustle” to make some money, not a way to get rich quickly. If you are ready to put in some study and some time to trade a Forex demo account, you have a good chance to reach a point of profitability (on paper) over a few months. At this point, you could responsibly start to trade with real money, which brings a new psychological challenge to most traders. If you can overcome that final hurdle, you should be able to generate a profit, but be careful to never take that for granted. It always takes some work.
I recommend traders in Nigeria avoid Forex bootcamps and training centers. All the educational material you need is available for free on the internet. When you come to choose a broker, I further recommend that you choose a reputable international broker which accepts Nigerian residents as clients, to ensure the security of your department.
How much do you need to start trading Forex in Nigeria?
You can start forex trading with as little as N5,000 on most brokerage platforms in Nigeria.
Is Forex trading legal in Nigeria?
Forex trading is clearly legal in Nigeria if you are trading your own money for your own benefit.
When can I trade Forex in Nigeria?
As Nigeria is one hour ahead of London, and the best time to trade Forex is widely agreed to be during the New York/London overlap, followed by the later New York session, the best time to trade Forex in Nigeria will usually be between 2pm and 10pm local time. In any case, the Forex market is open in Nigeria from very early Monday morning until late Friday night.
How can I trade Forex in Nigeria?
Work out how much capital you must start with, which should be at least $120 if you use a broker offering micro-lots of $12 if you use a broker offering nano-lots. Then use our guide to find the best Forex broker for you to choose the best broker fitting your personal circumstances.
Is Forex trading profitable in Nigeria?
Data suggests that while about 72% of retail Forex traders fail to generate profit, the 28% who are profitable achieve this by using leverage carefully and by utilizing proven, profitable trading strategies in a disciplined way.
Can I trade Forex with Naira?
Yes, you can trade forex with Naira. Although the Naira is not one of the major currencies in the world, some Forex brokers do accept deposits directly in Naira.